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Why Shares of Bloom Energy Are Bounding Higher Today

By Scott Levine – Aug 10, 2022 at 11:57AM

Key Points

  • Bloom Energy beat analysts' top-line estimates.
  • The company achieved expansion in both gross and operating margins.
  • Management believes it will generate positive cash flow in 2022.

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Margin expansion for a growth company has a funny way of electrifying investors.

What happened

Beating analysts' second-quarter revenue expectations of $229.4 million, Bloom Energy (BE 2.12%) reported sales of $243.2 million for the period. But that's hardly the only thing charging up investors in this fuel cell specialist today.

An encouraging 2022 forecast as well as favorable coverage from Wall Street are other catalysts powering investors' enthusiasm, and as of 11:57 a.m. ET on Wednesday, shares of Bloom Energy are up 16.1%.

So what

Beyond the top line of the income statement, investors recognized the company's progress toward profitability as a positive from the quarter. Bloom Energy reported an adjusted gross profit margin of 19.6% for the second quarter, up from the 18% adjusted gross margin that it reported during the same period last year. Similarly, the company had an adjusted operating margin of negative 10.1%, indicating a narrower loss than the negative 10.3% that it reported in the second quarter of 2021.

Perhaps the greater source of investor glee today, though, is the fact that management affirmed its 2022 guidance: revenue of $1.1 billion to $1.15 billion and positive operating cash flow. For context, Bloom Energy reported revenue of $972 million and $974 million in 2021 and 2020, respectively. As for cash from operations, Bloom Energy had negative $61 million in 2021 and negative $99 million in 2020.

Providing more fodder for the bulls today are two analyst upgrades on the stock.

  • Biju Perincheril, an analyst at Susquehanna, raised the price target to $30 from $28.
  • Pavel Molchanov at Raymond James (NYSE:RJF) lifted the price target to $29 from $23.

Now what

It shouldn't come as much of a shock that Bloom Energy's shares are soaring today. The company's earnings report and unchanged confidence in an auspicious forecast for 2022 are clearly enough to stoke bulls' enthusiasm. For investors focused on hydrogen and fuel cell, Bloom Energy is certainly one of the most compelling names to consider.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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